Long-Term Performance of Malaysian Horizontal Mergers and Acquisitions

This study examines the long-term performance of Malaysian horizontal M&A activities. Four different measures were applied to ascertain whether the expected long-term economic gains are actually realized following the M&As. The findings indicate that the effects of M&A on bidder firms ar...

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Main Author:	Aik, Naik Chiek
Format:	Thesis
Language:	English English
Published:	2010
Subjects:	Economic development - Malaysia. Consolidation and merger of corporations - Law and legislation - Malaysia. Consolidation and merger of corporations
Online Access:	http://psasir.upm.edu.my/id/eprint/19663/1/GSM_2010_4.pdf
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spelling	my-upm-ir.196632013-03-28T07:07:17Z Long-Term Performance of Malaysian Horizontal Mergers and Acquisitions 2010-08 Aik, Naik Chiek This study examines the long-term performance of Malaysian horizontal M&A activities. Four different measures were applied to ascertain whether the expected long-term economic gains are actually realized following the M&As. The findings indicate that the effects of M&A on bidder firms are negative in the long run. In particular, the operating performance of bidder firms deteriorated in the period after merger, while that of nonmerging rivals to bidder firms improved over the same period, suggesting a spillover effect. For target firms, the findings suggest no synergistic gains in operating performance after M&A activities. These findings are consistent with the findings of financial analysis for the same sample to ascertain results from the non-use of traditional method in M&A literature. The sub-period analysis however revealed that M&A activity improves the operating performance of matching firms only for a very short run specifically in a year after M&A. In fact, the operating performance of major competitors (both bidder and non-merging rival firms) deteriorates in the long run, most notably in all years after year three of M&As. The findings on industry effect reveal that M&A activity diminishes operating performance of bidder firms in manufacturing industry and matching firms in construction industry, suggesting that horizontal M&A activity in these industries (which rely heavily on the manpower) is not advantageous to improve operating performance of bidder firms and non-merging rival firms in Malaysia. Consistent with the literature, the findings showed no significant change in technical efficiency of the merging firms after M&As. Similar findings are documented for the matching firms despite the insignificant declines in technical efficiency of matching firms are lower compared to bidder firms. Bidder firms however show a significant decline in cost efficiency in the long run, particularly within two specific window periods of three years before and three years after, and three years before and all years after year three of M&As. The findings show a significant improvement in productivity of merging firms and nonmerging rival firms in the long run. Similar to the bidder firms, productivity growth of non-merging rival firms is mainly due to the technical change (frontier shift effect) despite their higher level of technological progress compared to the bidder firms. Productivity of target firms, on the other hand, is solely contributed by the efficiency change (catching up effect). Economic development - Malaysia. Consolidation and merger of corporations - Law and legislation - Malaysia. Consolidation and merger of corporations 2010-08 Thesis http://psasir.upm.edu.my/id/eprint/19663/ http://psasir.upm.edu.my/id/eprint/19663/1/GSM_2010_4.pdf application/pdf en public phd doctoral Universiti Putra Malaysia Economic development - Malaysia. Consolidation and merger of corporations - Law and legislation - Malaysia. Consolidation and merger of corporations Graduate School of Management English
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English English
topic	Economic development - Malaysia. Consolidation and merger of corporations - Law and legislation - Malaysia. Consolidation and merger of corporations
spellingShingle	Economic development - Malaysia. Consolidation and merger of corporations - Law and legislation - Malaysia. Consolidation and merger of corporations Aik, Naik Chiek Long-Term Performance of Malaysian Horizontal Mergers and Acquisitions
description	This study examines the long-term performance of Malaysian horizontal M&A activities. Four different measures were applied to ascertain whether the expected long-term economic gains are actually realized following the M&As. The findings indicate that the effects of M&A on bidder firms are negative in the long run. In particular, the operating performance of bidder firms deteriorated in the period after merger, while that of nonmerging rivals to bidder firms improved over the same period, suggesting a spillover effect. For target firms, the findings suggest no synergistic gains in operating performance after M&A activities. These findings are consistent with the findings of financial analysis for the same sample to ascertain results from the non-use of traditional method in M&A literature. The sub-period analysis however revealed that M&A activity improves the operating performance of matching firms only for a very short run specifically in a year after M&A. In fact, the operating performance of major competitors (both bidder and non-merging rival firms) deteriorates in the long run, most notably in all years after year three of M&As. The findings on industry effect reveal that M&A activity diminishes operating performance of bidder firms in manufacturing industry and matching firms in construction industry, suggesting that horizontal M&A activity in these industries (which rely heavily on the manpower) is not advantageous to improve operating performance of bidder firms and non-merging rival firms in Malaysia. Consistent with the literature, the findings showed no significant change in technical efficiency of the merging firms after M&As. Similar findings are documented for the matching firms despite the insignificant declines in technical efficiency of matching firms are lower compared to bidder firms. Bidder firms however show a significant decline in cost efficiency in the long run, particularly within two specific window periods of three years before and three years after, and three years before and all years after year three of M&As. The findings show a significant improvement in productivity of merging firms and nonmerging rival firms in the long run. Similar to the bidder firms, productivity growth of non-merging rival firms is mainly due to the technical change (frontier shift effect) despite their higher level of technological progress compared to the bidder firms. Productivity of target firms, on the other hand, is solely contributed by the efficiency change (catching up effect).
format	Thesis
qualification_name	Doctor of Philosophy (PhD.)
qualification_level	Doctorate
author	Aik, Naik Chiek
author_facet	Aik, Naik Chiek
author_sort	Aik, Naik Chiek
title	Long-Term Performance of Malaysian Horizontal Mergers and Acquisitions
title_short	Long-Term Performance of Malaysian Horizontal Mergers and Acquisitions
title_full	Long-Term Performance of Malaysian Horizontal Mergers and Acquisitions
title_fullStr	Long-Term Performance of Malaysian Horizontal Mergers and Acquisitions
title_full_unstemmed	Long-Term Performance of Malaysian Horizontal Mergers and Acquisitions
title_sort	long-term performance of malaysian horizontal mergers and acquisitions
granting_institution	Universiti Putra Malaysia
granting_department	Graduate School of Management
publishDate	2010
url	http://psasir.upm.edu.my/id/eprint/19663/1/GSM_2010_4.pdf
_version_	1747811436932890624

Long-Term Performance of Malaysian Horizontal Mergers and Acquisitions

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